At a Glance
Duende Capital evaluates secondary purchases of private-market positions held through SPVs and other investment vehicles, often from GPs whose investors have split preferences between getting liquidity and staying invested.
Duende begins with investment diligence and an assessment of the proposed purchase price, then considers the underlying asset, existing vehicle, and LP preferences.
Depending on the circumstances, Duende considers three distinct paths: an outright sale, an LP election, or a sale and reinvestment.
Sydecar provides the operating infrastructure behind the resulting vehicle, including formation, KYC and compliance, banking, and post-close administration.
The Opportunity
Most of the recent attention on venture secondaries has focused on access: investors looking to buy into high-quality private companies before a liquidity event. A growing part of Duende Capital’s work starts from the other side of the transaction.
Many venture GPs manage investment vehicles holding materially appreciated positions that remain years from a potential IPO or acquisition. These vehicles still require administration, tax reporting, and investor communication, even as LP preferences change. Some want liquidity today. Others want to preserve their exposure.
The primary challenge with executing a secondary deal is identifying a purchase structure that accommodates investors’ different preferences while respecting the underlying investment’s restrictions and the existing vehicle’s obligations.
Execution
Duende uses several different transaction structures depending on the asset, existing vehicle, and LP preferences:
Outright sale. Duende acquires the position outright via an SPV and settles the existing economics. LPs receive liquidity, and the legacy vehicle is wound down.
LP election. Where permitted, LPs may elect to receive liquidity or maintain exposure. Duende acquires the interests of selling investors through a dedicated SPV. Continuing investors may retain their interests in the existing vehicle or transfer their exposure into a new vehicle. Depending on the structure, the legacy SPV may remain in place or be wound down.
Sale and reinvestment. The legacy vehicle sells its entire position and distributes the proceeds under its governing documents. LPs who want to maintain exposure may separately invest in the new SPV. This is a new investment decision, not a rollover or a guaranteed right to participate.
Where permitted, a secondary transaction can accommodate different LP preferences without requiring every LP to make the same choice.
For each investment, Duende diligences the underlying asset to determine pricing before evaluating the purchase structure. It then coordinates the proposed purchase with the selling GP, underlying manager, and relevant advisors.
Where Sydecar Fits
Once the investment and structure are agreed upon, the transaction still has to close. Executing it requires coordinating the acquisition vehicle, investor onboarding, required approvals, transaction documents, banking, and settlement. Complex secondaries can involve multiple entities, sellers, and a series of transfers that must close simultaneously.
Takeaways
For GPs managing mature investment vehicles, secondary liquidity can be more than an exit mechanism. It can return capital, preserve exposure for investors who want to remain invested, and simplify legacy structures.
Duende evaluates and structures the investment, while Sydecar provides the infrastructure and operational support to help close the deal.
(This article describes general transaction mechanics. It is not an offer to sell or a solicitation to purchase interests in any investment vehicle.)
If you're structuring liquidity for a legacy vehicle, or building the vehicle on the buy side, talk to our team:
